NEW YORK -- Bank of America said Wednesday that its fourth-quarter profits fell by nearly half from the same period the year before, as the bank had to book $2.9 billion in charges related to the new tax law.
But setting aside those charges, the bank is showing signs that whatever damage was left over from the financial crisis is largely healed.
The consumer banking giant said it earned $2.37 billion, or 20 cents a share, down from $4.54 billion, or 39 cents a share, from the same period a year ago.
Like many banks in the previous quarter, Bank of America had to write down the value of its stockpile of deferred tax assets on its balance sheet. The assets are basically credits it could have used to pay future income taxes that built up after the 2008 financial crisis, when banks like Bank of America had billions of dollars in losses from bad mortgages and other toxic investments. Because the maximum corporate tax rate was reduced from 35 percent to 21 percent under the tax law, Bank of America and other financial companies had to revalue those credits.
The bank also had to write down $946 million in renewable energy investments that were also affected by the tax law.
Bank of America executives see the tax law as a positive for the lender. The company now expects its effective tax rate to be roughly 20 percent, down from 29 percent. While the bank has raised wages for some of its lowest-paid, Bank of America Chief Executive Officer Brian Moynihan said he expects most of the tax savings to be channeled into stock buybacks and higher dividends.
Business on 01/18/2018